At the heart of business and financial transactions lies the <a href="https://www.skydo.com/blog/understanding-gstin-requirements-for-export-businesses-in-india?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Goods and Services Tax (GST)</a>, an ever-evolving taxation system designed to streamline commerce and empower economies.&nbsp;

GST serves as documentary evidence of the supply of goods or services. Additionally, GST filing is vital for tax compliance, <a href="https://www.skydo.com/blog/how-to-claim-input-tax-credit-refund-in-india?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">claiming input tax credits</a>, and maintaining transparent <a href="https://www.skydo.com/blog/ensuring-financial-compliance-5-tips-to-safeguard-your-businesss-finances?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">financial records</a>.

Within the vast GST universe, two essential players take centre stage: the GST bill format and the GST invoice. However, it is vital to get the invoice details right. Here’s why.&nbsp;

Common Problems Arising from Incorrect GST Invoices

Incorrect <a href="https://www.skydo.com/blog/what-is-e-invoicing-under-gst-and-who-needs-to-generate-it?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">GST invoices</a> can seriously affect businesses, particularly IT service providers, in the following ways.

To avoid these problems, what are the components of a GST invoice? What is the ideal GST bill format to follow? When should you release the invoice? Below are a few things to remember.

The key elements found in a GST bill include the following.

<a href="https://www.skydo.com/blog/how-to-find-right-HSN-code-sac-for-your-business?/utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">HSN (Harmonized System of Nomenclature) or SAC (Services Accounting Code)</a>: To classify the supplies and determine the applicable tax rates.

GST Formats Tailored for IT Service Providers

Below are some key aspects for IT service providers to consider regarding GST bills and invoices.

Consider the scenarios where the reverse charge mechanism is applicable and <a href="https://www.skydo.com/blog/mastering-compliance-a-step-by-step-guide-to-data-protection-payments-laws-and-industry-regulations-for-tech-exporters?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">ensure compliance</a>.

These standardised templates are designated by tax authorities for generating GST-compliant invoices. It outlines mandatory fields, such as supplier and recipient details, invoice number, date, description of goods or services, tax breakdown, and the total amount payable.&nbsp;

By adhering to these formats, you can ensure accurate documentation, enable seamless integration with financial systems, simplify auditing processes, and enhance credibility. It also promotes transparency, reduces errors, and ensures businesses meet the specific requirements set forth by tax authorities.

A GST invoice bill should include the following key elements:

Issuing a GST Invoice: When should you do it?

For services businesses, within 30 days from the supply date is the ideal time to issue a GST invoice. In the case of banking companies or financial institutions, the deadline is 45 days. Failure to issue the invoice within the specified timeframe can result in penalties.&nbsp;

However, when the transaction falls under the composition scheme, a consolidated bill of supply is issued instead of a tax invoice. This principle also applies when supplying services to unregistered individuals, where a simplified invoice may serve the purpose.&nbsp;

Maintaining copies of service supply invoices serves as evidence for legal compliance, facilitates claiming an input tax credit, and plays a crucial role in dispute resolution. They provide a record of transactions, ensure transparency, and help businesses meet regulatory requirements while enabling smooth operations.

You may need to raise a revised GST invoice in certain circumstances such as–

It is advisable to consult with a <a href="https://www.skydo.com/blog/how-can-the-right-chartered-accountant-help-your-tech-export-business?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">tax professional</a> or refer to the specific guidelines provided by the tax authorities to ensure proper adherence to the revised invoice requirements.

Best Practices for Creating and Managing GST Bills and Invoices

To effectively create, issue, and manage GST invoices, consider the following tips:

For IT service providers handling large transactions, using services specifically designed for <a href="https://www.skydo.com/blog/how-to-implement-e-invoicing-what-the-reduced-threshold-of-rs-5-crores-means-for-your-business?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">managing GST invoices</a> can be highly beneficial. These services offer features like bulk invoice generation, automatic tax calculations, data integration with accounting systems, and compliance checks.&nbsp;

It helps save time, reduces errors, and ensures seamless management of invoices, enabling businesses to focus on their core operations.

Q1. Is the GSTN and GSTIN the same thing?

Ans: GSTN (Goods and Services Tax Network) is the technology platform that manages the GST system, while the GSTIN meaning (Goods and Services Tax Identification Number) is a unique 15-digit number assigned to businesses for tax purposes.

Q2. What’s the difference between invoice date and due date?

Ans: The invoice date is when the GST invoice is issued, while the due date is the deadline by which the payment for the goods or services mentioned in the invoice should be made.

Q3. Is there a fee associated with obtaining a GSTIN?

Ans: Typically, there is a fee associated with obtaining a GSTIN. The fee can vary depending on the type and location of your business.

Q4. Is it mandatory to maintain the invoice serial number?

Ans: Yes, it is mandatory to maintain an invoice serial number for GST invoices to ensure proper documentation and compliance with tax regulations.

Q5. What should I do once I've obtained my GSTIN?

Ans: Once you've obtained your GSTIN, you should ensure proper maintenance of GST invoices, timely filing of GST returns, and compliance with GST regulations to avoid penalties and legal issues.

Q6. How do I file a complaint regarding a forged GSTIN?

Ans: If you suspect a forged GSTIN, you should report it to the relevant tax authorities, providing them with all available details and evidence of the forgery for investigation.

Q7. Can I digitally sign my invoice through DSC?

Ans: Yes, you can digitally sign your GST invoice using a Digital Signature Certificate (DSC) to ensure the authenticity and integrity of the document.

Q8. What should I do once I've obtained my GSTIN?

Ans: After obtaining your GSTIN, you should ensure that your GST invoices follow the prescribed tax invoice format, maintain proper records, and comply with GST regulations in your business transactions.

Ans: GST number is a common term used to refer to GSTIN (Goods and Services Tax Identification Number), a unique 15-digit identifier assigned to businesses in India for tax purposes. It is crucial for tax compliance and record-keeping in the GST system.

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It’s 2017. You’re creating an <a href="https://www.skydo.com/blog/transforming-your-invoicing-experience-with-skydo?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">invoice for your software services to a client</a>, and you add VAT/Sales tax before you complete the total. It seems straightforward, but is it really?&nbsp;

Let’s understand how tax used to work before and after GST, how GST works for export businesses, GST Compliance and Export Services, <a href="https://www.skydo.com/blog/how-to-claim-input-tax-credit-refund-in-india?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">input tax credit</a>, and how to claim GST refunds.

Previous tax structure vs new tax structure

<a href="https://www.bankbazaar.com/tax/differences-between-gst-and-previous-tax-structure.html">Under the previous regime</a>, you would have charged a 15% service tax on services worth Rs. 75,000. Then, your output tax would be Rs. 11,250. But, if you purchased office supplies for Rs. 25,000 and paid 5% as VAT, the input tax would have been Rs. 1,250.&nbsp;

However, you couldn't adjust the input VAT already paid on stationery from the output service tax. Consequently, the total tax outflow would have been Rs. 12,500.

But, after the GST implementation, you would charge 18% GST on services worth Rs. 75,000, which amounts to Rs. 13,500. Subtracting the GST on office supplies (Rs. 25,000 x 18%) equals Rs. 4,500. Your net GST liability would be Rs. 9,000.

The introduction and implementation of the Goods and Services Tax (GST) eliminated the previous cascading effect of “tax on tax” created by several other indirect taxes in India, including excise duty, VAT, and services tax.&nbsp;

It made the lives of CAs easier, and it was easier for an aspiring entrepreneur to follow their dream and start a business without the nightmare of multiple tax filings.

Each type imposes different tax rates on the buyer's end.&nbsp;

Filing these GST returns requires a business to register through the GST portal. Once the registration is complete, you get a GSTIN, a unique 15-digit identification number assigned to registered taxpayers under the GST regime in India. It plays a crucial role in tracking transactions and ensuring tax compliance. It further enables the government to monitor the movement of goods nationwide and verify business tax payments.&nbsp;

Understanding GSTIN Registration for Export Businesses&nbsp;

A business’s GSTIN registration is subject to <a href="https://cleartax.in/s/gst-registration-limits-increased">certain thresholds and exemptions</a>, particularly if its turnover exceeds in the following cases.

A GSTIN also allows businesses to claim input tax credits on their purchases, reducing their overall tax liability.&nbsp;

This identification number needed for GST and for your business also requires filing periodic returns, which may vary based on the nature of your business and its turnover. These returns include details of sales, purchases, input tax credits, and output tax liabilities. The frequency of filing returns can range from monthly to quarterly or annually, depending on the turnover threshold.

You can file these tax returns through the GST portal, the official government platform for GST-related activities. You must file these returns within the specified due dates to avoid penalties or late fees.

Recently, the government of India also announced a new threshold for <a href="https://www.skydo.com/blog/what-is-e-invoicing-under-gst-and-who-needs-to-generate-it?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">e-invoicing</a>, requiring businesses with an annual turnover of over Rs. 5 crores to adopt the e-invoicing system. This system requires companies to generate invoices in a standard electronic format and upload them to a central portal.

Considering the volume of transactions involved in a business with such a considerable turnover, the e-invoicing system aims to reduce errors, increase accuracy and efficiency, provide real-time validation, improve cash flow management, and enhance tax administration.

However, as a business providing your services abroad, how do you navigate this tax, and does it apply to the services you provide worldwide? Let’s find out.

Under the GST regime, export services are&nbsp; considered "zero-rated supplies'', meaning&nbsp; a supplier can supply without payment of GST if they have submitted the LUT or with payment of GST and then get a refund once the goods are exported.&nbsp;

However, to claim refunds on the taxes paid on their inputs, they must register for GSTIN. Additionally, GSTIN registration provides several benefits for export service businesses, including having access to <a href="https://www.skydo.com/blog/all-you-need-to-know-about-lut-for-tech-service-export/?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">input tax credits</a>.

The compliance and documentation for an export services business defer based on whether you accept payments in foreign or Indian currency. The steps in both scenarios are as follows.

If the business accepts payment in foreign currency for services rendered abroad, no GST applies. However, the government requires you to justify this amount which requires submitting a <a href="https://www.skydo.com/blog/everything-you-need-to-know-about-lut?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Letter of Undertaking (LUT)</a>.

A LUT must be furnished with <a href="https://www.indiafilings.com/learn/gst-letter-of-undertaking-lut-for-financial-year-2022-23/">Form GST RFD-11 per rule 96A</a>, wherein they declare their commitment to meet all the prescribed GST requirements for exporting goods without making an IGST payment.

According to the CGST Rules, 2017, registered individuals can submit an Export bond or LUT (Letter of Undertaking) in Form GST RFD-11 to export goods or services without paying the integrated tax.&nbsp;

They are eligible to apply for an LUT if they are registered under GST and intend to supply goods or services within India, overseas, or to Special Economic Zones (SEZs) without the requirement of paying the integrated tax.

If you fail to provide the LUT, you must pay IGST or furnish an export bond.

Foreign exchange transactions are subject to 18% Goods and Services Tax (GST) in India. These transactions include activities such as remittance, currency exchange, or any other conversion of one currency to another.

To comply with GST regulations, businesses engaged in foreign exchange transactions are required to file certain forms. <a href="https://taxinformation.cbic.gov.in/content-page/explore-forms">These forms</a> are as follows.

The <a href="https://groww.in/p/tax/gst-rates">rates under GST</a> are categorised into different tax slabs based on the type of goods or services being supplied, as shown in the table below.

Additionally, specific goods and services, such as petroleum products, alcoholic beverages, and electricity, are kept outside the purview of GST and are subjected to separate taxes by the respective state governments. Some luxury items and sin goods may attract an additional cess on top of the applicable GST rate.

The <a href="https://www.skydo.com/blog/how-to-claim-input-tax-credit-refund-in-india?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Input Tax Credit (ITC)</a> allows businesses to claim credit for taxes on inputs used in producing goods or services and offset the GST liability on the output. It reduces their overall tax liability and costs, encourages tax compliance and enhances the competitiveness of businesses.&nbsp;

However, they must ensure compliance with the GST rules and maintain proper documentation to support their ITC claims.

Businesses must register under GST and use or intend to use the claimed input goods or services for business purposes, not personal use.

To claim ITC, businesses must ensure that their suppliers have reported the supplies accurately and filed their GST returns. The recipient of goods or services must possess a valid tax invoice or debit note issued by the supplier.&nbsp;

The recipient must have received the goods or services. The supplier must have paid the GST charged to the government on the supply.

You cannot claim ITC on goods and services used for personal purposes, exempt supplies, and non-business purposes. Additionally, you cannot claim ITC on specific goods or services for which a composition scheme has been opted.

GST payments can be made online through the GST portal using a bank account or credit/debit card.&nbsp; Other ways include the following.

Under GST, there are various circumstances in which businesses can claim a refund. Here are some common cases.

You must determine the amount of excess tax paid or the eligible refundable amount based on specific circumstances to claim a refund. You should submit the refund application within the prescribed time limit.

Here's the step-by-step process for claiming a GST refund.

You can <a href="mailto:support@skydo.com">reach out to Skydo</a> for any queries you may have about GST compliance for your export service business. <a href="https://www.skydo.com/?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Visit our website</a> or contact our customer support team to get started.

Frequently Asked Questions (FAQs) on GSTIN and Export Business

Ans: GST, or Goods and Services Tax, is a unified indirect tax system implemented in India. It replaces multiple taxes like VAT, excise duty, and service tax, simplifying the tax structure. GST is levied at various stages of the supply chain, from manufacturing to consumption, and is based on the value addition principle. It helps streamline tax collection, reduce tax evasion, and promote a more efficient and transparent taxation system.

Q2. Can unregistered businesses engage in export services?

Ans: No, unregistered businesses cannot engage in exports. Every exporter must register under GST and obtain a GSTIN.

Q3. What is the procedure for obtaining a GSTIN for export service businesses?

Ans: Business owners must apply for GST registration through the GST Portal and provide their business details, PAN, and other relevant documents.&nbsp;

Q4. How does GST affect the pricing of export services?

Ans: Business owners can claim input tax benefits on GST paid for purchases. It reduces the tax burden and makes them more competitive internationally.

Q5. What happens if an exporter fails to comply with GST regulations?

Ans: If an exporter fails to comply with GST regulations, they may face fines, cancellation of registration, penalties and other legal consequences.&nbsp;

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Since the introduction of the Goods and Services Tax (GST), all companies above a certain threshold of annual revenue have been mandated to apply for and obtain a unique GSTIN number. It is well known that GST has simplified transactions and taxation for businesses, especially those operating across multiple states. One of the major reasons for this simplification is the concept of e-invoicing.&nbsp;

In simple terms, E-invoicing refers to the process of transmitting your invoice data to the GST portal so that the transaction is recorded in the GST system instantly. Otherwise transactions get recorded only when the business files its tax returns. This system ensures that data is transmitted to the GST department as soon as the invoice is issued to customers. Over the years, this threshold for mandatory e-invoicing has been consistently brought down from initially covering only companies above Rs. 500 crores of annual turnover to now Rs. 10 crores of annual turnover. Government is further planning to reduce it to a threshold of Rs. 5 crores.

If your business is likely to cross this threshold this financial year, Please read below to know more about e-invoicing, and prepare your organisation to get into the e-invoicing regime.

What is e-Invoicing Under GST and Who Needs to Generate It?

Are you a GST-registered business owner wondering about e-Invoicing under GST? Essentially, e-Invoicing refers to the electronic invoicing system mandated by the GST law for certain notified GST-registered businesses, where B2B invoices and few other documents are required to be authenticated electronically by GSTN.

It's a system where B2B invoices and other relevant documents are authenticated electronically by GSTN (Goods and Services Tax Network) for further use on the common GST portal. Initially implemented for specific categories of persons, mostly large enterprises, e-Invoicing has now been expanded to cover mid-sized and small businesses as well.

With e-Invoicing, you don't need to generate invoices on the GST portal. Instead, you submit an already generated standard invoice on a common e-invoice portal. This automates multi-purpose reporting with a one-time input of invoice details.

Under the electronic invoicing system, an identification number (IRN) will be issued against every invoice by the Invoice Registration Portal (IRP) managed by the GSTN. All invoice information gets transferred from this portal to both the GST portal and the e-way bill portal in real-time. Therefore, it eliminates the need for manual data entry while filing GSTR-1 returns and generating part-A of the e-way bills.You just need to paste the IRN on the invoice and issue it to your customers.

Now, who must generate the e-invoice and when?

The e-invoice applicability depends on your turnover criteria. The table below summarises the different phases and their respective turnover criteria:

Note: If your previous year's annual turnover was below the latest threshold limit (currently Rs. 10 Cr) but increased beyond this limit in the current year, e-Invoicing would apply from the beginning of the next financial year. However, if your previous year turnover exceeds any newly announced threshold then you must comply with the e-invoicing from the date of notification itself. To simplify it further, on the date of a particular notification, you have to check your previous year turnover and assess if it falls under the threshold limit.&nbsp;

Example - ABC Ltd has a turnover of Rs. 12 Cr in FY 21-22. Notification 1/2022 was announced on 01.04.2022 mentioning a threshold of Rs. 20 Cr. Since ABC LTD turnover was less than 20 Cr in previous year, they are not obliged to follow e-invoicing in FY 22-23. After a few months, notification 17/2022 was announced on 01.10.2022 mentioning a threshold of Rs. 10 Cr. Here, irrespective of current year turnover, ABC LTD will have to follow e-invoicing with effect from 01.10.2022 as their previous year turnover is more than the threshold limit of Rs. 10 Crs.

How to plan if I am required or will soon be required to follow e-invoicing?

It is preferable that you move to an invoicing solution which is integrated with GST E-invoicing platform, where you can just push a finalised invoice data to GST portal on a click of button. There are many free and paid solutions available in the market. You can use the GST Department’s <a href="https://einvoice1.gst.gov.in/">E-invoicing Solution</a>, which is free to use, or paid platforms like <a href="https://www.zoho.com/in/books/">Zoho</a> and <a href="https://cleartax.in/s/e-invoicing-enterprise-software">Clear</a>.

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